FIRST DIVISION

G.R. No. 168414 August 31, 2006

BENEDICTO S. AZCUETA, Petitioner,
vs.
LA UNION TOBACCO REDRYING

CORPORATION (LUTORCO), FIELDMAN AGRICULTURAL TRADING CORPORATION (FATCO), FIELDMAN TRUCKING CORPORATION (FTC), SEE LIN CHAN, KAMBIAK Y. CHAN a.k.a. JOHN CHAN JR. and TITA C. YABUT, Respondents.

D E C I S I O N

YNARES-SANTIAGO, J.:

This petition for review 1 on certiorari assails the September 27, 2004 Decision 2 of the Court of Appeals in CA-G.R. SP No. 83270 which set aside the January 12, 2004 Decision 3 and January 31, 2004 Resolution 4 of the Regional Trial Court of Agoo, La Union, Branch 31 in Civil Case No. A-2225, permanently enjoined the enforcement of the November 22, 2002 Decision 5 of the Municipal Trial Court of Aringay, La Union in Civil Case No. 483; and its June 7, 2005 Resolution 6 denying petitioner’s motion for reconsideration.

The facts are as follows:

La Union Ventures, Inc. (LUVI) owns several parcels of real property covered by Transfer Certificate of Title Nos. T-37318, T-37319, T-37320, T-37321 and T-372322, where the corporation’s main office, as well as the offices of respondents La Union Tobacco Redrying Corporation (LUTORCO), Fieldman Agricultural Trading Corporation (FATCO), Fieldman Trucking Corporation (FTC), and the residence of See Lin Chan, Kambiak Y. Chan a.k.a. John Chan Jr. and Tita C. Yabut are located.

It appears from the records that the subject properties were for a time owned by respondent LUTORCO but were later transferred to LUVI on April 8, 1993 in exchange for stock subscription. However, on June 17, 1996, respondents sought to reclaim ownership of the subject properties and instituted an action for cancellation and annulment of titles before the Regional Trial Court of La Union in Civil Case No. A-1567. 7 Pending resolution of Civil Case No. A-1567, respondents took physical possession of the subject properties on April 25, 1997.

Thus, on May 13, 1997, petitioner Azcueta, in his capacity as corporate secretary of LUVI, filed a suit for forcible entry with prayer for a temporary restraining order and/or writ of preliminary injunction against respondents. The case was raffled to the Municipal Trial Court of Aringay, La Union and docketed as Civil Case No. 483.

On September 24, 1997, petitioner also filed a petition for injunction and damages with application for a temporary restraining order and a writ of preliminary injunction with the Securities and Exchange Commission (SEC) on the ground of respondents’ usurpation of powers of the duly elected directors and officers of LUVI. The case was later transferred from SEC to the Regional Trial Court of Manila, Branch 46 and docketed as Civil Case No. 01-99719.

LUVI alleged that it is the owner of the subject properties; that it allowed respondents to use the main gate of its compound to give them access to their offices and residence; that on April 25, 1997, respondents illegally acquired possession and control of LUVI’s land and buildings through intimidation, threat, strategy and stealth; that respondents replaced LUVI’s security and detective agency with their own; and that respondents repainted the gate of the compound with the logo "LUTORCO."

Respondents argued that LUVI’s ownership over the properties is in dispute; that petitioner has no legal capacity to sue in behalf of LUVI; that respondents acted as officers and agents of LUVI in taking over the subject properties; and that the company’s physical possession of the properties was never disturbed.

In the forcible entry case, respondents also raised the issue of jurisdiction. They claimed that the controversy is intra-corporate in nature as it involves a dispute between stockholders of LUVI, hence the same falls within the jurisdiction of SEC. Petitioner on the other hand, argued that at the time respondents took over LUVI’s properties, they were not stockholders, officers or majority stockholders of the corporation. Petitioner also averred that the allegations in the complaint clearly show that the action filed is a possessory action and not an intra-corporate controversy.

On July 4, 1997, the Municipal Trial Court of Aringay ruled in favor of respondents on the issue of jurisdiction. It held that the controversy is intra-corporate in nature and dismissed the forcible entry suit. 8 On appeal, the Regional Trial Court of Agoo, La Union, Branch 32, in Civil Case No. A-1775, affirmed the Municipal Trial Court’s decision in its resolution dated June 23, 1998. 9 Petitioner appealed to the Court of Appeals in CA-G.R. SP No. 48302 which reversed the Regional Trial Court’s resolution in its decision dated June 30, 1999 10 and reinstated Civil Case No. 483. It held that the only issue submitted to Municipal Trial Court is physical possession of the properties and that the appropriate remedy available to the petitioner is the action for forcible entry. 11 Respondents filed a petition for review on certiorari with the Supreme Court in G.R. No. 140037 but the petition was denied in a resolution dated January 4, 2000. 12

Thus, the Municipal Trial Court proceeded with the trial of Civil Case No. 483. On November 22, 2002, the court rendered a decision in favor of LUVI, ordering respondents to vacate the properties and to pay reasonable compensation for its use. The dispositive portion of the decision reads:

WHEREFORE, judgment is hereby render IN FAVOR OF Plaintiff LA UNION VENTURES, Inc. (LUVI), AND AGAINST ALL Defendants, ordering them:

1. To vacate the properties described in Transfer Certificate of Title Nos. T-37318, T-37319, T-37320, T-37321, T-37322, including all the structures and improvements found therein; and to peacefully turn over the same to PLAINTIFF LUVI.

2. To pay the PLAINTIFF the amount of THREE HUNDRED EIGHTY TWO THOUSAND FOUR HUNDRED NINETY TWO PESOS AND FIFTY CENTAVOS (P382,492.50) a month, as reasonable compensation for the use, enjoyment and occupancy of the LUVI Compound commencing in May 1997 until they have completely vacated the premises.

3. To pay attorney’s fees in the amount of TWENTY THOUSAND PESOS (P20,000.00).

SO ORDERED. 13

LUVI moved for the execution of the said decision on November 29, 2002. On the same date, respondents filed a Notice of Appeal and a Motion to Post Supersedeas Bond. 14

In the meantime, LUVI allegedly underwent a change in management and elected new directors and officers. On February 11, 2003, LUVI, through its new president Julie C. Dyhengco, sent a letter 15 to the Municipal Trial Court Judge Ethelwolda A. Jaravata claiming that LUVI’s possession of the subject property was never disturbed and that the issues in the forcible entry case have been settled internally between LUVI and respondents. 16 Thus –

Dear Judge Jaravata,

This is in connection with the above-entitled case which was decided on November 22, 2002.

We would like to reiterate and emphasize that the possession over the subject premises has always been with LUVI and has never been disturbed. The occupancy of the lessees had always been lawful and authorized by LUVI. Attached are the certification of the Securities and Exchange Commission (SEC) as (to) the members of the board and officers of LUVI and the Resolution ratifying the acts and lease contracts entered into by LUVI thru its administrator FATCO.

All issues with the defendants had been settled internally. The result thereof shall be properly accounted to the other stockholders in the proper proceedings and forum where the CDF group which fraudulently controlled over (sic) LUVI should also be made to account for the books of LUVI as well as the record of [i]ts transaction with our group.

Very Truly Yours,

(Sgd.) Julie C. Dyhengco

Respondents filed a manifestation/comment, citing the letter and arguing that execution of the decision in the forcible entry case was no longer feasible. 17 In support thereof, respondents attached a Certificate of Corporate Filing/Information 18 issued by SEC and LUVI’s General Information Sheet dated January 30, 2003, 19 showing that respondents are stockholders of the corporation and that petitioner Azcueta has ceased to be an officer. Respondents also filed a motion to withdraw their Motion to Post Supersedeas Bond. 20

In a resolution 21 dated March 10, 2003, the Municipal Trial Court granted petitioner’s motion for issuance of a writ of execution. Respondents filed a motion for reconsideration and/or motion to quash writ of execution. They reiterated that the decision had been mooted by a supervening event, particularly LUVI’s reorganization which resulted in an internal settlement between the parties.

The motion for reconsideration and/or motion to quash writ of execution was denied in a resolution 22 dated April 8, 2003. The Municipal Trial Court did not give credit to respondents’ allegations concerning the alleged supervening event. The court held that it has no jurisdiction to rule on the veracity of the SEC documents submitted by respondents as they involve matters which are intra-corporate in nature.

On April 24, 2003, respondents filed a petition for certiorari before the Regional Trial Court of Agoo, La Union, Branch 31, impugning the March 10, 2003 and April 8, 2003 resolutions of the Municipal Trial Court as having been issued with grave abuse of discretion. Consistent with their position that LUVI had elected a new set of officers, respondents refused to recognize petitioner’s authority to represent the corporation and impleaded him in the said case as an individual respondent. Meanwhile, Willy Baltazar (Baltazar), claiming to be the newly designated general manager of LUVI, joined respondents’ cause and intervened in the said case.

In a decision dated January 12, 2004, the Regional Trial Court dismissed the petition for certiorari. It declared that the petition-in-intervention filed by Baltazar in behalf of LUVI should be threshed out in a separate proceeding. 23

Respondents moved for reconsideration and inhibition, but both were denied on January 31, 2004.

Consequently, petitioner filed before the Municipal Trial Court a Motion for Immediate Issuance of a Writ of Execution with Prayer for Satisfaction by Levy dated February 10, 2004. 24 The court issued a writ of execution dated March 31, 2004 25 again requiring respondents to vacate the subject properties and to pay LUVI reasonable compensation for the use, enjoyment and occupancy of its properties.

Aggrieved, respondents filed a petition 26 for certiorari and prohibition with prayer for a temporary restraining order and preliminary injunction before the Court of Appeals in CA-G.R. SP No. 83270. They asserted that execution of the November 22, 2002 Decision in Civil Case No. 483 must be stayed in view of the change in management of LUVI which constitutes a supervening event.

On June 21, 2004, the Court of Appeals granted respondents’ prayer for a temporary restraining order of the Municipal Trial Court’s decision. 27

Meanwhile, in Civil Case No. 01-99719 before the Regional Trial Court of Manila, Branch 46, a notice of dismissal was also filed by Baltazar, purportedly in behalf of LUVI. On August 30, 2004, the trial court rendered a decision 28 nullifying respondents’ acts as officers and directors of LUVI, and permanently enjoining them from further representing or misrepresenting themselves as such. The court likewise denied Baltazar’s notice of dismissal and ruled that his authority to represent LUVI is unfounded, stating that:

Hence, this Court hereby declares as null and void any and all acts performed or done by the defendants or any other person or persons acting in their behalf, either in their alleged capacities as directors or officers of LUVI or otherwise, in relation to the representation, use, administration, control and management of the assets and properties of LUVI from the time they took over the LUVI compound on April 25, 1997 up to the present.

The defendants are also hereby enjoined from: (1) representing or misrepresenting themselves to be the directors or officers of LUVI; (2) usurping the functions of the legitimate directors and officers of LUVI; (3) performing any act for and in behalf of LUVI or in relation to any of the properties of LUVI, including but not limited to the use, administration, control and management of assets and properties of LUVI; and (4) interfering in the business and operations of LUVI.

x x x x

The Court is in receipt of a Notice of Dismissal dated July 8, 2004, purportedly filed by the plaintiff LUVI. Allegedly, LUVI president Francisco Willy Baltazar filed the said Notice. As the records and evidence presented in this case show, Mr. Baltazar is a representative of the Defendants and not of the Plaintiff. Thus he cannot rightfully ask for the dismissal of this case as the alleged representative of LUVI. x x x. 29 (Emphasis added)

On September 23, 2004, petitioner filed an Urgent Manifestation 30 before the Court of Appeals in CA-G.R. SP No. 83270 to inform the court of the Regional Trial Court’s decision. Petitioner moved for the dismissal of respondents’ appeal considering that the trial court had declared null and void LUVI’s change in management and effectively mooted the issue on supervening event.

However, on September 27, 2004, the Court of Appeals granted respondents’ petition for certiorari and prohibition and reversed and set aside the Decision and Order of the Regional Trial Court of Agoo dated January 12, 2004 and January 31, 2004. The Municipal Trial Court of Aringay was permanently enjoined from enforcing its November 22, 2002 Decision in Civil Case No. 483. The Court of Appeals held:

The case at bar comes within the purview of the latter exception, which necessitates a departure from the general rule on immediate execution of decisions in forcible entry cases. Verily, after the issuance of the MTC’s November 22, 2002 Decision, material facts and circumstances supervened which brought about a material change in the situation of the parties. This is evident from the letter emanating from LUVI itself, informing the MTC that the issues involved in the case had already been settled "internally" and that LUVI, per Board Resolution No. 2003-02-A, had ratified petitioners’ contract of lease. As likewise confirmed by LUVI in the same letter addressed to the MTC, possession over the subject premises had always been with it, had never been disturbed and the occupancy thereof by the petitioners had always been lawful and authorized. Clear from these facts and circumstances is LUVI’s intention to waive the benefits of the subject MTC Decision. This intention was made more evident by LUVI’s intervention in favor of the petitioners, through its newly designated general manager and representative, Willy Baltazar ("Baltazar"), in the case for annulment of the March 10, 2003 and April 8, 2003 Resolutions of the MTC.

The authority of LUVI’s newly elected Officers and Board of Directors is supported by the General Information Sheet dated January 30, 2003, sworn to and filed with the Securities and Exchange Commission by LUVI’s Treasurer and Director, Susie C. Tan. Moreover, LUVI’s Board Resolution No. 2003-03, designating Willy Baltazar as the new administrator to manage and administer the affairs of the corporation superseded the earlier alleged appointment of respondent Atty. Azcueta as the duly authorized representative of LUVI. Atty. Azcueta was therefore without authority to move for the execution of the MTC’s Decision on behalf of LUVI.

In the same vein, there is no compelling urgency for the execution of the MTC’s Decision in this case considering LUVI’s express waiver of such execution and its admission that possession of the subject premises had never been disturbed even during the pendency of the case. 31

Petitioner’s motion for reconsideration was denied, hence this petition for review on certiorari raising the following issues:

1.) WHETHER OR NOT THE ALLEGED "SUPERVENING EVENT" MATERIALLY CHANGED THE SITUATION OF THE PARTIES TO BAR THE EXECUTION OF JUDGMENT IN THE FORCIBLE ENTRY SUIT [CIVIL CASE NO. 483].

2.) WHETHER OR NOT THE ALLEGED "SUPERVENING EVENT" SHOULD HAVE BEEN THRESHED OUT IN AN INTRA-CORPORATE PROCEEDING, NOT THROUGH A CERTIORARI SUIT.

Petitioner contends that the decision of the Municipal Trial Court of Aringay in Civil Case No. 483 must be enforced. He maintains that the only issue in the forcible entry case is possession and that the issuance of a writ of execution in the said case is proper. Further, he argues that the issue on the alleged supervening event is intra-corporate in nature and has been resolved by the Regional Trial Court of Manila, Branch 46 in Civil Case No. 01-99719.

Petitioner insists that he is the duly authorized representative of LUVI by submitting a copy of the minutes of an organizational board meeting 32 held on June 15, 2005, during which the board of directors reiterated his authority to represent LUVI, as well as the General Information Sheet 33 of the corporation filed with SEC on June 30, 2005, showing that he still holds the position of corporate secretary.

Respondents argue that petitioner has no legal personality to file the instant petition. They claim that, by virtue of the election of a new board of directors for LUVI, petitioner’s authority as corporate secretary had been effectively removed; that petitioner is not a real party in interest and has lost his standing to institute the present action; that the change in management of LUVI is a supervening event which bars the execution of the November 22, 2002 Decision; and that the Municipal Trial Court of Aringay and the Regional Trial Court of Agoo had jurisdiction to rule on the supervening event.

The petition is meritorious.

The core issue in this case is whether the alleged supervening event – the change in management of LUVI which resulted in an internal settlement between the parties – bars the execution of the November 22, 2002 Decision of the Municipal Trial Court of Aringay in Civil Case No. 483.

In Silverio, Jr. v. Filipino Business Consultants, Inc., 34 we held:

The court may stay immediate execution of a judgment when supervening events, occurring subsequent to the judgment, bring about a material change in the situation of the parties. To justify the stay of immediate execution, the supervening events must have a direct effect on the matter already litigated and settled. Or, the supervening events must create a substantial change in the rights or relations of the parties which would render execution of a final judgment unjust, impossible or inequitable making it imperative to stay immediate execution in the interest of justice.

In the instant case, we do not find any material change in the situation of the parties which justifies a further delay of execution, let alone a permanent injunction. The change in management of LUVI does not constitute a supervening event which renders inequitable the immediate execution of the November 22, 2002 Decision of the lower court. Not even the subsequent acquisition of ownership by any person of the property in dispute will bar execution of judgment in an action for ejectment. 35

Time and again, this Court has ruled that the only issue for resolution in forcible entry cases is material possession or possession de facto of the properties involved. 36 Moreover, said cases are summary in nature as to provide an expeditious means of protecting the right to possession of the property. In Joven v. Court of Appeals, 37 we held:

The philosophy underlying this remedy is that irrespective of the actual condition of the title to the property, the party in peaceable quiet possession shall not be turned out by strong hand, violence, or terror. In affording this remedy of restitution, the statute seeks to prevent breaches of the peace and criminal disorder which might ensue from the withdrawal of the remedy. Another purpose is to discourage those persons who, believing themselves entitled to the possession of the property, resort to force rather than to some appropriate action in the courts to assert their claims.

It is settled that LUVI, in whose name the subject properties are titled, has the right to possession over the subject properties. Respondents have been adjudged as having no right to take over and occupy the said properties. Upon judgment, execution should have immediately ensued in accordance with law.

Even granting for the sake of argument that the change in management was a supervening event, it has been declared void in Civil Case No. 01-99719 before the Regional Trial Court of Manila, Branch 46 which has jurisdiction over the same as it involves a dispute among stockholders of the corporation. To write finis to the controversy, we deem it necessary to take judicial notice of the proceedings therein. It has been held that a court may consult decisions in other proceedings, in order to look for the law that is determinative of or applicable to the case under review. In some instances, courts have also taken judicial notice of proceedings in other cases that are closely connected to the matter in controversy. These cases "may be so closely interwoven, or so clearly interdependent, as to invoke" a rule of judicial notice. 38

In its August 30, 2004 Decision, the court held that respondents are usurpers of the functions of the legitimate directors and officers of LUVI. Moreover, the court denied the Notice of Dismissal filed by Baltazar and declared petitioner as the duly authorized representative of the corporation. Baltazar filed a petition for certiorari before the Court of Appeals in CA-G.R. SP No. 86626 which rendered a Decision 39 dated May 26, 2005 as follows:

The authority of Baltazar to file the notice of dismissal was allegedly based on Board Resolution No. 2004-19 adopted by the board members of LUVI, whereby as the president of LUVI, he was authorized to sign, execute and deliver any and all documents relative to the withdrawal and dismissal of Civil Case No. 01-99719. If we are, however, to trace the circumstances that led to the alleged election of Baltazar as the president of LUVI, it is evident that such election can be attributed to the acts of the respondents-stockholders in the case below, which acts were precisely among the ones complained of and sought to be enjoined in the petition for injunction. The same thing goes with the subsequent grant of authority upon Baltazar to file the notice of dismissal.

x x x x

In the instant case, the public respondent denied the subject notice of dismissal precisely because Baltazar’s authority to file the notice was not recognized by plaintiff LUVI. On the contrary, the filing was opposed by the plaintiff. As has been previously discussed by this Court, the conclusion that he was, instead, representing the defendants is a logical conclusion that could be deduced from the circumstances attending the instant case.

Moreover, with the trial court’s finding that the representatives of the plaintiff in the case below were the legitimate officers and directors of LUVI, and that the defendants were mere usurpers of the functions of these officers and directors, it had sufficient ground to deny the notice of dismissal. x x x The fact that the acts performed by the defendants were annulled by the trial court therefore renders the supposed authority of Baltazar unfounded, for it was these acts performed and resolutions issued by these defendants that ultimately led to the assumed authority of Baltazar. In view of all these, we find no grave abuse of discretion amounting to lack or excess of jurisdiction committed by the trial court in denying the notice of dismissal. 40 (Emphasis added)

Baltazar, in behalf of LUVI, filed a petition for review on certiorari but was denied by this Court in a resolution dated October 19, 2005 41 in G.R. No. 169357 for failure to show that a reversible error had been committed. He moved for reconsideration but the same was denied on March 22, 2006. A second motion for reconsideration was filed but was likewise denied in a resolution dated June 26, 2006.

It is clear therefore that respondents’ theory must fail considering that the sole basis for the same has been struck down. There was no valid change in management and, consequently, no supervening event to speak of that would justify a stay of execution. The letter from Julie C. Dyhengco is a mere scrap of paper as she was not a duly elected officer of LUVI. Similarly, Baltazar’s intervention cannot be considered an express waiver on the part of LUVI because his appointment as the corporation’s new representative was nullified.

In view of the foregoing, the permanent injunction granted by the Court of Appeals has lost all factual and legal bases and must be lifted. As it were, the execution of the judgment in Civil Case No. 483 has been delayed for more then three years. Therefore, possession of the subject properties must be immediately restored to LUVI through its representative, herein petitioner.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 83270 dated September 27, 2004 and its June 7, 2005 Resolution denying petitioner’s motion for reconsideration are REVERSED and SET ASIDE. The January 12, 2004 Decision and January 31, 2004 Resolution of the Regional Trial Court of Agoo, La Union, Branch 31 in Civil Case No. A-2225 dismissing respondents’ petition for certiorari are hereby AFFIRMED and REINSTATED.

The decision of the Municipal Trial Court of Aringay dated November 22, 2002 in Civil Case No. 483 ordering the respondents to vacate the premises and to pay reasonable compensation for its use is immediately executory and the assailed order of the Municipal Trial Court dated March 10, 2003 and its resolution dated April 8, 2003, for the issuance of a writ of execution are likewise AFFIRMED and REINSTATED.

SO ORDERED.

CONSUELO YNARES-SANTIAGO

Associate Justice

WE CONCUR:

ARTEMIO V. PANGANIBAN

Chief Justice
Chairperson

MA. ALICIA AUSTRIA-MARTINEZ, ROMEO J. CALLEJO, SR.

Associate Justice Associate Justice

MINITA V. CHICO-NAZARIO
Associate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

ARTEMIO V. PANGANIBAN
Chief Justice


Footnotes

1 Rollo, pp. 3-24.

2 Id. at 26-39. Penned by Associate Justice Aurora Santiago-Lagman and concurred in by Associate Justices Portia Aliño-Hormachuelos and Rebecca De Guia-Salvador.

4 Id. at 124-126.

5 Id. at 46-65. Penned by Presiding Judge Ethelwolda A. Jaravata.

6 Id. at 40-45.

7 MTC records, pp. 776-777.

8 Id. at 764-765.

9 Id. at 505-533. Penned by Executive Judge Leo M. Rapatalo.

10 Id. at 755-779.

11 Id. at 777.

12 Id. at 783.

13 Rollo, p. 65.

14 Id. at 28.

15 Id. at 29.

16 Id. at 28.

17 CA rollo, pp. 122-132.

18 Id. at 125.

19 Id. at 126-131.

20 Id. at 133.

21 Rollo, pp. 66-69. Penned by Presiding Judge Ethelwolda A. Jaravata.

22 Id. at 70-80.

23 Id. at 121.

24 CA rollo, pp. 270-273.

25 Id. at 279-280.

26 Id. at 2-34.

27 Id. at 386-388.

28 Id. at 488-505. Penned by Judge Artemio S. Tipon.

29 Id. at 501-502.

30 Id. at 481-487.

31 Rollo, pp. 35-36.

32 Id. at 334-335.

33 Id. at 325-333.

34 G.R. No. 143312, August 12, 2005, 466 SCRA 584, 598-599.

35 Chua v. Court of Appeals, 338 Phil. 262, 271 (1997).

36 Rivera v. Rivera, G.R. No. 154203, July 8, 2003, 405 SCRA 466, 471.

37 G.R. No. 80739, August 20, 1992, 212 SCRA 700, 710.

38 Bongato v. Malvar, 436 Phil. 109, 118 (2002).

39 Rollo, pp. 377-386.

40 Id. at 383-385.

41 Id. at 387.
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